Industrial foundations live forever


Danish industrial foundations live five times longer than other companies and do better in times of crisis. These are the findings in a large research project from CBS, which also suggests that the reason is long-term planning and resistance to management fads.


The largest ever research project on industrial foundations is drawing to a close and is producing new research results. A picture is emerging of companies that take the long view, give management time to achieve results, attaches importance to employee training - and the companies survive far longer than other types of companies. This is what the research results demonstrate according to Steen Thomsen, project manager and Professor at the Center for Corporate Governance at CBS.

- The research confirms many of our hypotheses, but now we have exact figures, says Steen Thomsen and continues:

- The biggest surprise is the fact that industrial foundations live five times longer than other types of companies. It is the result of a foundation ownership which attaches more importance to whether the company is thriving than to short-term profitability, he says.  

The research project began in late 2011. 12 Researchers have participated, and 15 research papers have been published so far. In cooperation with Statistics Denmark, the Danish Business Authority and Experian, the researchers have mapped the activities of all Danish industrial foundations and foundation-owned companies.

The industrial foundations are a unique company structure typical of Denmark, where they account for 10 percent of the private business community, 50 percent of Danish research and a significant part of the stock exchange through industrial foundations such as e.g. Maersk and Novo Nordisk. There are more than 1300 foundations in Denmark of which approximately 400 have real economic significance as they own companies.

- The industrial foundations are of great importance to the Danish economy, and they provide a stabilising influence, which is particularly important at a time of economic crisis. In many ways, we can see that their behaviour reflects very long-term perspectives, and that can be an advantage to the companies and to the Danish society, says Steen Thomsen.

- If we in Denmark need a nucleus in our business community to fund research and secure jobs, our research confirms that industrial foundations are the way to go, says professor Steen Thomsen and continues:

- In the management wave, companies have to keep up with the latest trends. They have to be listed, delisted, owned by equity funds. There are constant changes. Industrial foundations are financially conservative, they do not sell the whole lot and they do not move to the Cayman Islands. They run steadily with plenty of money saved, they have a fixed and growing workforce which they trust and employees are better trained than in other types of businesses. This financially conservative attitude turns out to be fully compatible with performance.

Among the main conclusions of the 15 working papers so far are:

•    Foundation ownership is more stable as foundations do not sell or buy their shares nearly as often as other company owners. (The stability in ownership in percentages is 4.5 times greater than that of comparable companies.)

•    Foundation-owned companies live longer. 60% of the foundation-owned companies reach fifty years of age against only 10% of comparable companies with different ownership. 20% of them live to be 100 years, which only 3% of other companies do.

•    Foundation-owned companies have more stable management. Directors and board members are less frequently replaced. The annual director replacement is 13% in the foundation-owned companies, but 18% in other companies.  

•    Foundation-owned companies also run more steadily. Employment, turnover and result fluctuates less. For example, returns fluctuate 25% less.

•    Foundation-owned companies have a conservative capital structure with less debt than other types of companies.  Foundation-owned companies have 56% debt in relation to their assets against 63% in other companies. That makes them more robust and less vulnerable to an economic crisis.

•    On the other hand, the foundation-owned companies grow more slowly, which among other things is due to the fact that they are less active in mergers and acquisitions.

•    Employees in foundation-owned companies are better paid and have a higher education level than in the rest of the business community.

•    Not all foundation-owned companies do equally well. The big and consolidated foundation-owned companies do better than average, while the smaller ones do worse. This may, among other things, be due to more professional management of the large industrial foundations.

Read the research publications 
Background for the research project

See an overview of the results (in Danish)
Read an article on the results (in Danish)

For more information, please contact Steen Thomsen, project manager and Professor, by email or telephone 38152590...
...or chief press officer Mikael Koldby, email, phone +45 3815 3722.

The page was last edited by: Communications // 12/17/2017